AUD/USD: Recalls familiar area near 0.7300 after a volatile day

Following Thursday’s rollercoaster ride, AUD/USD returns to near 0.7300 known area, currently around 0.7312, at the start of Friday’s Asian session. In doing so, the pair stays mostly unchanged after rising for four consecutive days. The reason could be traced from the recent challenges to the risk-tone sentiment as market recovery from the second half of the previous day fades amid mixed messages.

No cheers for upbeat Aussie data…

Australia’s August month employment numbers surprised global traders with the Unemployment Rate’s four-month low of 6.8%, not to forget upbeat Employment Change figures of +111K versus -50K forecast, early during the previous day. However, the US dollar’s jump to one-week high poured cold water on the face of optimists before wiping it off during the later part of Thursday amid a shift in the market sentiment.

While the US dollar’s previous rise could be traced from the Federal Reserve’s perceived optimism and fears of a temporary brake to the easy money, recovery in the global risks might have taken clues from the news concerning Brexit, coronavirus (COVID-19) and mixed US data.

Recently, the US Federal Reserve said that it prepares for another stress test for large banks and the results will be out in October. The news counters the previous day’s optimism portrayed by the American central bank policymakers. Additionally, news that the group of scientists advising the UK Prime Minister Boris Johnson and his government recommend another two weeks national lockdown also probe market players.

Comments from the EU Commission President Ursula von der Leyen that she believes a trade deal with the UK was still possible despite the “distraction” caused by Boris Johnson’s Internal Market Bill became the key together with the BOE’s readiness for negative rates. Further, US President Donald Trump teased the vaccine to be out by late October while mixed prints of American Jobless Claims and the Philadelphia Fed Manufacturing Survey also played their role earlier.

Against this backdrop, Wall Street closed in red while the US 10-year Treasury yields stay around 0.69% with no major changes by Thursday‘s end.

Looking forward, a lack of major data/events on the calendar may push traders to watch over risk catalysts for fresh impetus. This also gives hope of consolidation in prices after the bulls’ dominance so far during this week.

Technical analysis

Hanging man candlestick on the daily chart suggests buyers are tired following multiple failures to stay strong beyond 0.7300. Though, 21-day SMA near 0.7275 and an ascending trend line from August 12, currently around 0.7220, act as strong downside supports.